Biti bid to ensnare monetary authorities for political posturing

Tendai Biti and Mthuli Ncube

IN as much Tendai Biti is entitled to his opinion, he needs to exercise limits to his brush style and be modest enough to give credit where it is due, lest he risks being perceived as a rabble-rouser, consumed in self-righteousness by criticising for the sake of criticism.

In a constitutional democracy such as ours, the gateway for the assumption of power is to contest in the next election. Be that as it may, being in opposition does not necessarily imply finding fault in every action of the sitting government. What I find preposterous is where the likes of Biti and other cavaliers start to contradict themselves, forgetting that they too must account for their actions.

For example, in March this year Biti, who was clad in a Jewish headgear, told Finance and Economic Development Minister, Professor Mthuli Ncube, in his face, that the market had no confidence in him, along with the Governor of the Reserve Bank of Zimbabwe (RBZ), Dr John Mangudya, as he debated the economic situation in the country.

To achieve currency stability, he opined that Prof Ncube must repeal Statutory Instrument (SI) 33 of 2019 and SI 142 of 2019; allow the Zimbabwe dollar to co-exist with other currencies; allow market forces of demand and supply to determine the exchange rate; put a lot more emphasis on production; do away with export surrender requirements and eliminate budget deficits.

Introduced in February 2019, the import of SI 33 was that dollar balances held in local foreign currency (FCA) bank accounts and mobile payment platforms, as well as bond notes and coins were no longer regarded as equal in value to US dollar. This was to be followed with SI 142 in June of the same year, pronouncing the Zimbabwe dollar as the sole legal tender in any transactions in Zimbabwe.

Five months down the line, Biti was back in the National Assembly singing a different tune, urging Prof Ncube, who along with Dr Mangudya are his favourite punch bags, to remove the dual pricing system, saying it was causing distortions in the economy, while creating accounting nightmares for industry and commerce.

“So, we are generating illegality upon illegality, but most importantly, we are creating distortions in the economy. Let us have one single pricing system. The dual pricing system is creating havoc in industry. It is creating accounting nightmares,” he was quoted as saying while debating the Finance Bill, adding that “If you run a business, it means you now have two sets of accounts: One that deals with the US dollar economy and the other that deals with a local economy with two different tax obligations and interest implications.

“There is a different interest for the US dollar and the local dollar, which does not work. It will not work.”

It is unfortunate that Prof Ncube missed the opportunity to remind Biti of the patent paradox, which could lead one to wonder if there is a policy blueprint to guide the MDC-Alliance officials as their pronouncements seem to follow times of the year (seasons) for in the intervening period much of what he recommended in March had since come to pass.

For instance, Zimbabwe is now operating a multi-currency regime, with the market based foreign currency auction trading system setting the exchange rate. Treasury has also eliminated budget deficits, which were fuelling money supply and inflation, with production bracing Government’s interventions in agriculture, mining, industry etc.

Just as well, Prof Ncube stuck to his guns because issues around currency are confidential and cannot be discussed in a public forum where members of the Fourth Estate would be feverishly looking for their next headlines.

While I hold no brief for Prof Ncube or Dr Mangudya, I find it strange that Biti, who has been calling for sanctions to be imposed on the Zanu PF Government is sincere in wishing the same administration well.

I hope these two gentlemen will not be fooled into adopting a mono-currency regime when it is as clear as daylight that Zimbabwe does not have sufficient US dollars or Rand to support the country’s economy.

Zimbabwe tried the mono-currency route before and it failed. Through SI 142 of 2019 — known as the Reserve Bank of Zimbabwe RBZ (Legal Tender) Regulations — the Zimbabwe dollar was declared the sole currency effective 24 June 2019. The Government had to review this position in July this year.

That mono-currency created a lot challenges for people. One can, therefore, see the political mischief in Biti’s deception of pushing for the adoption of the US dollar or his favourite South African rand (by joining the Rand Monetary Union) before the establishment of supportive fundamentals.

It is also quite obvious that instead of commending the duo of Prof Ncube and Dr Mangudya for introducing the forex auction trading system which has ushered in price stability, Biti — who is a darling of White House and Number 10 Downing Street — is now crying more than the bereaved by hiding behind “accounting challenges” to sneak in the mono-currency regime when accountants themselves are rooting for the obtaining situation.

Being an accountant myself, local companies are under no legal obligation to prepare two sets of accounts, unless their boards of directors request them to. The reporting currency remains the Zimbabwe dollar, although for tax purposes companies have to separate tax returns — one for US dollars and another for the local currency — which is purely a matter of currency conversion that does not warrant the country to risk the prevailing stability for the sake of avoiding such simple conversion.

In future, Biti should speak authoritatively on matters legal and not to encroach into other professional fields when he is least qualified to do so.

Prof Ncube and Dr Mangudya are best advised to remain focussed in their mission and not to be dragged into dangerous experiments that have nothing to do with improving livelihoods for ordinary Zimbabweans who are more worried about putting bread on their tables.

Equally well is the fact that ProfNcube is alive to the reality that the Bretton Woods institutions have other agendas that are incompatible with Harare’s thinking. What is therefore important for now is to follow the currency roadmap adopted by the RBZ and sustain that prevailing stability by ensuring that forex continues to flow into the auction system.

Advice from the Bretton Wood Institutions is never a panacea in itself. It needs to be taken with a pinch of salt as no country has ever transformed itself into a developed nation on the back of advice from these international financial institutions.

Nathan Gurira is an economist. He writes here in his personal capacity. This was first published by The Herald.

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